In a move aimed at enhancing transparency and governance in the non-profit sector, the General Authority for Endowments issued a comprehensive clarification on the mechanism for dealing with "unknown endowments" and determining their legitimate uses. This announcement comes as part of the Authority's new guidance manual, launched to simplify regulatory and legal provisions, reflecting the Kingdom's commitment to developing and improving the efficiency of the endowments sector.
What is an unknown endowment and how is it dealt with?
The authority explained in its statement that an endowment is classified as "of unknown beneficiary" if the endowment's origin is established, but the endower's intention is unknown or there is no explicit text specifying the beneficiary of its proceeds. To ensure that the proceeds are spent correctly, the authority established a clear hierarchy of evidence:
- Researching documents and evidence: First, one refers to old records, historical documents, or any physical evidence that may indicate the wishes of the donor.
- Custom and the interpretation of the trustees: In the absence of documents, the prevailing custom at the time of the endowment is considered, or the interpretation of trustworthy trustees and reliable testimonies is relied upon.
- Spending on general charitable causes: If all means have been exhausted and no specific intention has been reached, the proceeds of the endowment are directed to general charitable causes and charities, as it is a general charitable endowment that serves the interests of Muslims and society.
Endowments: A historical depth and a pillar of development
These clarifications are of paramount importance given the historical significance of endowments (waqf) in Islamic civilization. For centuries, endowments were the primary source of funding for mosques, schools, hospitals, and water systems. As time passed and some endowments became obsolete, certain endowment deeds or the stipulations of the donors were lost, making it essential to have a regulatory body, such as an endowments authority, to resolve these issues and direct these frozen funds to serve the community instead of allowing them to fall into disuse.
Alignment with the Kingdom's Vision 2030
This regulatory move aligns with the goals of the Kingdom's Vision 2030, which prioritizes the non-profit sector and seeks to increase its contribution to the GDP. Through the governance of anonymous endowments, the Authority ensures the reinvestment of substantial financial returns into the economic and social cycle, thereby enhancing the sustainability of charitable work and supporting community development projects.
Enhancing trust and asset sustainability
The Authority affirmed that the adopted model not only identifies the banks but also focuses primarily on preserving and developing the endowment's principal through investment. This approach reinforces the principle of "preserving the principal and dedicating its benefits," and strengthens the confidence of the community and businesspeople in the endowment system, thus encouraging the establishment of new endowments managed according to the latest professional and Sharia-compliant standards.
This guide is part of an ongoing educational series launched by the Authority to answer common inquiries and bridge the knowledge gap among administrators and the general public, thus contributing to protecting endowments from extinction and achieving their noble objectives.
